Four months and $25 billion taxpayer dollars later
March 31, 2009
‘Those of us who oppose unlimited bailouts for struggling automakers don’t want these companies to fail. We want them to succeed’
WASHINGTON, D.C. - U.S. Senate Republican Leader Mitch McConnell made the following remarks on the Senate floor Tuesday regarding the administration’s auto bailout plan:
“The significance of the U.S. auto industry as a symbol of American creativity, industriousness, and prosperity is hard to overstate. So is the importance of its continued survival to the millions of American workers who design, build, and sell our cars here and around the world. And this is precisely why many of us have been insisting for years that management and labor take the tough but necessary steps to keep these companies viable not only in a recession, but also in good times.
“Unfortunately, many of those tough decisions have been put off time and again, and the day of reckoning has come for two of the big three automakers. Yesterday, the administration announced that GM and Chrysler had failed to come up with viable plans for survival, despite tens of billions of dollars in taxpayer bailouts aimed at avoiding this very thing.
“The immediate result of this failure on the part of the automakers was the administration’s decision to fire GM’s CEO — and the promise of even more bailout money if these companies take the same kinds of steps that Republicans have been demanding for years.
“Last fall, when the recession took hold, Republicans said that emergency support was justifiable for entities whose failure threatened to paralyze the nation’s entire economy. Taxpayer support for individual industries was not. Our reasoning was that the taxpayers would understand an effort to save the entire credit system, the lifeblood of the Main Street economy, but they wouldn’t support the government picking winners and losers based on political or regional calculations.
“And while no one takes pleasure in the continued struggles of the automakers, those warnings and that principle appear to have been vindicated by recent events. If our proposal had prevailed last fall, these two companies would have been forced to make the serious structural changes that billions of dollars in taxpayer money since that time have not produced. Republicans said the expectation of bailouts disincentivised reform, and it appears that we were right.
“In early December, I said that a tentative compromise between labor and management didn’t go nearly far enough, that what was needed was a firm commitment on the part of these companies to reform either in or out of bankruptcy, get their benefit costs under control, make wages competitive with foreign automakers immediately, and end the practice of paying workers who don’t work. I also said automakers had to rationalize dealer networks in response to the market.
“The previous administration took a different view. It said that an emergency infusion of taxpayer money would be enough to force these companies and labor leaders to act. The current administration agreed with that assessment and last month, when the automakers came back again for more money, the current administration complied with an additional $5 billion infusion of taxpayer dollars. That latest infusion appears to have had little or no effect.
“Yesterday, we got the verdict: four months and $25 billion taxpayer dollars after Republicans called for tough but needed reform, the automakers are no farther along than they were in December. As a result, the current Administration has decided that the bailouts can’t go on forever — though they’re still putting the cut-off date into the future. The taxpayer regret for this bailout is that it could have cost a lot less than $25 billion dollars. The answer to this problem was obvious months ago.
“Throughout this debate, some have tried to propagate the falsehood that this is a regional issue, that certain senators oppose bailouts because domestic auto makers don’t operate in their states. If that were true, I wouldn’t be standing here. Thousands of Kentuckians work at Ford assembly plants in Louisville, thousands more work for domestic suppliers throughout Kentucky, and for more than 30 years, every Corvette in America has rolled off a production line in Bowling Green, Kentucky.
“Those of us who oppose unlimited bailouts for struggling automakers don’t want these companies to fail. We want them to succeed. And if our proposals had been adopted, we believe they’d be in a much better position to do so. Hardworking autoworkers at places like Ford and GM in Kentucky have suffered because of the past decisions of unions and management. It’s not their fault that labor and management made the decisions that put them in this mess. And it’s no coincidence that Ford, the only U.S. auto company that has refused taxpayer bailout money to date, is also the most viable — even after the financing arm of one of its bailed-out competitors used taxpayer funds to provide its customers with better financing deals. Companies that make the tough choices and steer their own ship are better off for it in the short and long term.
“Everyone wants the domestic automakers to get through the current troubles and to thrive. But it’s going to take more than tough talk after the fact or the firing of CEOs. It’s encouraging to see the Administration is coming around to our view. It’s a shame the taxpayers had to put up $25 billion to get to this point.”
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WASHINGTON, D.C. - U.S. Senate Republican Leader Mitch McConnell made the following remarks on the Senate floor Tuesday regarding the administration’s auto bailout plan:
“The significance of the U.S. auto industry as a symbol of American creativity, industriousness, and prosperity is hard to overstate. So is the importance of its continued survival to the millions of American workers who design, build, and sell our cars here and around the world. And this is precisely why many of us have been insisting for years that management and labor take the tough but necessary steps to keep these companies viable not only in a recession, but also in good times.
“Unfortunately, many of those tough decisions have been put off time and again, and the day of reckoning has come for two of the big three automakers. Yesterday, the administration announced that GM and Chrysler had failed to come up with viable plans for survival, despite tens of billions of dollars in taxpayer bailouts aimed at avoiding this very thing.
“The immediate result of this failure on the part of the automakers was the administration’s decision to fire GM’s CEO — and the promise of even more bailout money if these companies take the same kinds of steps that Republicans have been demanding for years.
“Last fall, when the recession took hold, Republicans said that emergency support was justifiable for entities whose failure threatened to paralyze the nation’s entire economy. Taxpayer support for individual industries was not. Our reasoning was that the taxpayers would understand an effort to save the entire credit system, the lifeblood of the Main Street economy, but they wouldn’t support the government picking winners and losers based on political or regional calculations.
“And while no one takes pleasure in the continued struggles of the automakers, those warnings and that principle appear to have been vindicated by recent events. If our proposal had prevailed last fall, these two companies would have been forced to make the serious structural changes that billions of dollars in taxpayer money since that time have not produced. Republicans said the expectation of bailouts disincentivised reform, and it appears that we were right.
“In early December, I said that a tentative compromise between labor and management didn’t go nearly far enough, that what was needed was a firm commitment on the part of these companies to reform either in or out of bankruptcy, get their benefit costs under control, make wages competitive with foreign automakers immediately, and end the practice of paying workers who don’t work. I also said automakers had to rationalize dealer networks in response to the market.
“The previous administration took a different view. It said that an emergency infusion of taxpayer money would be enough to force these companies and labor leaders to act. The current administration agreed with that assessment and last month, when the automakers came back again for more money, the current administration complied with an additional $5 billion infusion of taxpayer dollars. That latest infusion appears to have had little or no effect.
“Yesterday, we got the verdict: four months and $25 billion taxpayer dollars after Republicans called for tough but needed reform, the automakers are no farther along than they were in December. As a result, the current Administration has decided that the bailouts can’t go on forever — though they’re still putting the cut-off date into the future. The taxpayer regret for this bailout is that it could have cost a lot less than $25 billion dollars. The answer to this problem was obvious months ago.
“Throughout this debate, some have tried to propagate the falsehood that this is a regional issue, that certain senators oppose bailouts because domestic auto makers don’t operate in their states. If that were true, I wouldn’t be standing here. Thousands of Kentuckians work at Ford assembly plants in Louisville, thousands more work for domestic suppliers throughout Kentucky, and for more than 30 years, every Corvette in America has rolled off a production line in Bowling Green, Kentucky.
“Those of us who oppose unlimited bailouts for struggling automakers don’t want these companies to fail. We want them to succeed. And if our proposals had been adopted, we believe they’d be in a much better position to do so. Hardworking autoworkers at places like Ford and GM in Kentucky have suffered because of the past decisions of unions and management. It’s not their fault that labor and management made the decisions that put them in this mess. And it’s no coincidence that Ford, the only U.S. auto company that has refused taxpayer bailout money to date, is also the most viable — even after the financing arm of one of its bailed-out competitors used taxpayer funds to provide its customers with better financing deals. Companies that make the tough choices and steer their own ship are better off for it in the short and long term.
“Everyone wants the domestic automakers to get through the current troubles and to thrive. But it’s going to take more than tough talk after the fact or the firing of CEOs. It’s encouraging to see the Administration is coming around to our view. It’s a shame the taxpayers had to put up $25 billion to get to this point.”
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